TOPIC: DIFFUSIONTOPIC: DIFFUSION
PRESENTED BY: PRESENTED BY: OMER MALIKOMER MALIK
ASIM MUSTAFAASIM MUSTAFAAMAT-UL-MATEENAMAT-UL-MATEEN
BILAL JAVEDBILAL JAVED
COURSE: MARKETING COURSE: MARKETING MANAGEMENTMANAGEMENTSECTION-B
Key points to discussKey points to discuss
Challenges in New Product Development (NPD)Challenges in New Product Development (NPD) Stages & Management of NPDStages & Management of NPD Trajectories of Change, Advantages/Disadvantages Trajectories of Change, Advantages/Disadvantages Diffusion & Adaption of New ProductsDiffusion & Adaption of New Products
DiffusionDiffusion
Four Key ElementsFour Key Elements
InnovationInnovation The social system on which the innovation impactsThe social system on which the innovation impacts The communication channels of that social systemThe communication channels of that social system TimeTime
New Product DevelopmentNew Product Development
What challenges does a company face in developing new products What challenges does a company face in developing new products and services?and services?
Categories of New ProductsCategories of New Products
Challenges in NPDChallenges in NPD
Idea ShortageIdea Shortage Uneven MarketsUneven Markets Social & Governmental ConstraintsSocial & Governmental Constraints CostCost Capital ShortageCapital Shortage Need for SpeedNeed for Speed Shorter Product Life CyclesShorter Product Life Cycles
New Product FailureNew Product Failure
Over ChampioningOver Championing Overestimated DemandOverestimated Demand Poor DesignPoor Design Poor Marketing ExecutionPoor Marketing Execution High Development CostsHigh Development Costs Strong Competitive ReactionStrong Competitive Reaction
New Product SuccessNew Product Success
Incremental Innovation e.g. Powdered Milk (Nestle Incremental Innovation e.g. Powdered Milk (Nestle Everyday), Samsung LED Televisions etc.Everyday), Samsung LED Televisions etc.
Disruptive Technologies (e.g. Q-Mobile Smart Phones)Disruptive Technologies (e.g. Q-Mobile Smart Phones)
What organizational structures and processes do managers use to What organizational structures and processes do managers use to manage new-product development?manage new-product development?
New Product Development New Product Development ProcessProcess
IdeaGeneration
ConceptDevelopmentand Testing
MarketingStrategy
Development
IdeaScreening
BusinessAnalysis
ProductDevelopment
MarketTesting
Commercialization
Trajectories of ChangeTrajectories of Change
Radical ChangeRadical Change Creative ChangeCreative Change Intermediating ChangeIntermediating Change Progressive ChangeProgressive Change
RadicalRadical
Changes when both the core assets and core activities are Changes when both the core assets and core activities are strengthened? The knowledge and brand capital built up in strengthened? The knowledge and brand capital built up in the industry erode, and so do customer and supplier the industry erode, and so do customer and supplier relationshipsrelationships
A good example is the travel business. Agencies’ core A good example is the travel business. Agencies’ core activities and core assets came under fire as the airlines activities and core assets came under fire as the airlines implemented systems to enhance direct price competition implemented systems to enhance direct price competition that offered new value (online monitoring of available that offered new value (online monitoring of available flights and fares)flights and fares)
Progressive ChangeProgressive Change
When neither core activities nor core assets are endanger. When neither core activities nor core assets are endanger.
Long-way trucking and commercial airlines. In those Long-way trucking and commercial airlines. In those industries, the basic assets, activities, and underlying industries, the basic assets, activities, and underlying technologies remained stable.technologies remained stable.
Creative ChangeCreative Change
When core assets are under threat and core activities are When core assets are under threat and core activities are stable. For instance: Think of movie studios churning out stable. For instance: Think of movie studios churning out new films or oil companies mining for new wells.new films or oil companies mining for new wells.
IntermediateIntermediate
When core activities are threatened while core assets When core activities are threatened while core assets retain their capacity to create value. retain their capacity to create value.
Companies that are emerging are offering digital media Companies that are emerging are offering digital media players that are based upon nonphysical discs which in players that are based upon nonphysical discs which in some aspects offer better performance than the incumbent some aspects offer better performance than the incumbent industry’s products.industry’s products.
An effective innovation strategy answers three key An effective innovation strategy answers three key questions: questions:
How will we Create value?
How will weDeliver value?
How will weCapture value?
Step 1: Creating ValueStep 1: Creating Value
How will the technology evolve?How will the technology evolve?
How will the market change? How will the market change?
Step 2: Capturing ValueStep 2: Capturing Value
How should we design the product model? How should we design the product model? Where should we compete in the value chain? Where should we compete in the value chain?
Step 3: Delivering ValueStep 3: Delivering Value
How do we manage the core business and growth? How do we manage the core business and growth? How do we use our strategy to drive real resource How do we use our strategy to drive real resource
allocation? allocation? What organizational structure, processes, measurements, What organizational structure, processes, measurements,
and incentive mechanisms do we use?and incentive mechanisms do we use?
Managing Development ProcessManaging Development Process
Generating IdeasGenerating Ideas Interacting with othersInteracting with others Interacting with EmployeesInteracting with Employees Studying CompetitorsStudying Competitors Adopting Creativity TechniquesAdopting Creativity Techniques Using idea Screening Using idea Screening
Advantages & DisadvantagesAdvantages & Disadvantages
Advantages:Advantages: Increased ReachIncreased Reach Speed & FlexibilitySpeed & Flexibility Disadvantages:Disadvantages: CompetitionCompetition HomogenizationHomogenization
Factors Affecting diffusion Factors Affecting diffusion
&&
Adaption of New Products Adaption of New Products
The Consumer Adoption ProcessThe Consumer Adoption Process
Adoption is an individual’s decision to become a regular user Adoption is an individual’s decision to become a regular user of a product.of a product.
Factors Influencing the Adoption ProcessFactors Influencing the Adoption Process
Differences in individual readiness to try new productsDifferences in individual readiness to try new products
Effect of personal influenceEffect of personal influence
Factors Influencing the Adoption Process Con’tFactors Influencing the Adoption Process Con’t
Differing rate of adoption and differences in organizationsDiffering rate of adoption and differences in organizations
Readiness to try new productsReadiness to try new products
The Traditional Model of Industry Life CycleThe Traditional Model of Industry Life Cycle
Time
Sal
es v
olum
e
Fermentation Shakeout Maturity Decline
An Alternate Model of Industry Life CycleAn Alternate Model of Industry Life Cycle
Time
Sale
s vol
ume
Emergence Convergence Coexistence Dominance
Established Industry
Emerging Industry
Stages of adoptionStages of adoption
– Awareness - the individual is exposed to the innovation but lacks Awareness - the individual is exposed to the innovation but lacks complete information about it complete information about it
– Interest - the individual becomes interested in the new idea and Interest - the individual becomes interested in the new idea and seeks additional information about it seeks additional information about it
– Evaluation - individual mentally applies the innovation to his Evaluation - individual mentally applies the innovation to his present and anticipated future situation, and then decides present and anticipated future situation, and then decides whether or not to try it whether or not to try it
– Trial - the individual makes full use of the innovationTrial - the individual makes full use of the innovation
– Adoption - the individual decides to continue the full use of the Adoption - the individual decides to continue the full use of the innovationinnovation